He made his name promoting notoriously debauched Gatecrasher Balls for private school teens in the 1980s and has remained a risque figure on the fringes of high society and the celebrity circuit ever since. But "Lord" Eddie Davenport, as he inexplicably styles himself, has now received the ultimate royal invitation: an extended stay at Her Majesty's pleasure.

Having escaped repeated brushes with the law throughout his adult life, Davenport, 45, has received a seven years and eight months jail sentence for one of the most cruel and audacious confidence frauds of modern times.

Outwardly, the rakishly charming Davenport – "Fast Eddie" is another soubriquet he cultivated – kept up the appearance of a fantastically decadent life of back to back parties among an army of celebrity "friends". Behind the scenes, said Judge Peter Testar, Davenport was the "ringmaster and guiding mind" marshalling a multimillion-pound confidence fraud that preyed on scores of small businesses in desperate need of finance.

Davenport appeared to have many of the trappings of wealth – his Monaco address, a clutch of luxury cars and a wardrobe full of Savile Row suits once helped the Daily Mail estimate his personal fortune at £130m. But investigators from the Serious Fraud Office have found few tangible assets actually owned by Davenport. His many victims can expect to see little, if any, of their losses recouped.

Davenport's main asset is his home in Portland Place, central London, which was the Sierra Leonean high commission until he controversially acquired it for a below-market sum in 1999 while the west African country was in the middle of a civil war. Under Davenport's ownership, the 24-room house has hosted celebrity parties and "upmarket" swinger events called Killing Kittens. It has also been used as the venue for music videos, including Amy Winehouse's Rehab, a location for films such as The King's Speech and for Kate Moss's Agent Provocateur fashion shoot. Three years ago the US drinks firm Fortune Brands converted one room into a giant Courvoisier-filled punchbowl for a publicity stunt.

But as Davenport – instantly recognisable for his glassy-eyed smile, plummy delivery and big cigars – revelled in the carefully fostered notoriety of Portland Place, over the road at another building, his mind was focused on fraud. Through a group of companies called Gresham – unconnected to the legitimate wealth management advisory firm Gresham Financial – Davenport and his band of co-conspirators falsely promised to finance more than 50 commercial loans over four years from 2005.

Most of the enterprises Gresham said it would back were ambitious construction projects from Hull to India. No loans were ever advanced but businesses were persuaded to part with huge sums in "deposits" and fees for "verification", "loan guarantee" and "due diligence".

SFO investigators focused on just 10 of the largest victims and found that Gresham had promised to lend them £500m. In the company's records, investigators found payments of £4.5m had been received from prospective borrowers. Testar noted that this figure was just a fraction of the losses experienced by Davenport's victims, many of whom had committed huge sums to new business enterprises in the belief that they had secured financing. Davenport's conviction and sentencing last month can only be reported now after three remaining co-conspirators entered guilty pleas at Southwark crown court.

Among Davenport's band of fraudsters was Richard Stephens, formerly called Richard Kirkup, who was convicted in another advance fee fraud case brought by the SFO in 2004.

Together, the conmen built a tissue of lies and illusion around Gresham, creating the impression of a business experienced in large-scale commercial loans. The business purported to have been trading since 1958, but in truth was a shelf company acquired and renamed by Davenport in 2005 for the sole purpose of duping desperate borrowers.

Bogus accounts, glossy brochures and ads in the Financial Times and other publications added to the veneer of credibility, as did a string of aliases used by the fraudsters.

Eventually Gresham folded in October 2009, with companies secretly controlled by Davenport petitioning for the winding up. This was again part of the plan; Davenport had set up a second bogus loan company, called Cutting & Co, to repeat the fraud.

The phoney peer had previously been linked to two other companies that collapsed leaving behind huge debts, prompting police and inspectors from the Department for Trade and Industry to raid Portland Place in 2006. The probe led to action again one audit firm, but nothing in relation to Davenport.

A fixture in the gossip columns, Edward Ormus Sharington Davenport, the son of a Fulham restaurateur, obsessively collected images of himself with celebrities, many of which he posted on his website, davenporttrust.com. Among those he is pictured with are Hugh Grant, Victoria Beckham, Simon Cowell, Mick Jagger, Paris Hilton, Sir Philip Green, Sir Stelios Haji-Ioannou, Prince Albert of Monaco, Dita Von Teese and justice secretary Kenneth Clarke.

In his late teens and early 20s Davenport became a name to strike fear into the hearts of public school headmasters across the home counties and beyond. It was to him, and his notorious Gatecrasher Balls, that floppy haired boys and blossoming Sloanes flocked in their thousands to let down their hair. And, in some cases, their underwear too.

"Orgies at wild child ball. Don't tell mum," screamed one tabloid headline from the time. According to the Sunday Telegraph it was "Unbridled lust among upper-class Lolitas and public school Lotharios." But to Davenport's delight, his notoriety only added to the allure, and it appeared there was little the authorities could do to stop him.

The lucrative parties came to an abrupt end, however, when the tax man came calling at the end of the decade. A considerable sum in VAT was owing from ticket sales and Davenport could not, or would not, pay up. The result was a conviction for tax fraud in 1990 which saw him sentenced to nine months in jail, swiftly reduced on appeal to a suspended sentence.

Davenport emerged from prison uncowed and rapidly returned with various bar and nightclub property ventures, which again attracted controversy. Basing himself between Monaco and London, he went to great lengths to distance himself from the companies in which he was involved.

As Judge Testar put it: "He did not leave very many footprints in the snow himself." In part, this is thought to be one reason why his past links to controversial businesses failed to result in action against him by the authorities.

One of his closest brushes with the law came in 1998 when he was charged with two others with posing as aristocrats to run up an £18,000 bill at Gleneagles during a five-day new year party at the Scottish luxury hotel. The charges were denied and later dropped. Davenport failed to appear in court, sending a doctor's note stating that he was seriously ill with renal failure and could not travel because he was on kidney dialysis.

Some 13 years later, similar pleas for leniency were put before Testar in September, but this time to little avail. Asked in an interview with Tatler magazine four years ago how he found his two-week prison experience in 1990, Davenport said: "Boring. There aren't many parties there."

• This article was amended on 6 October 2011 because the original picture caption said Davenport and Sanan-ua are with their husky puppy, when the puppy actually looks closer to a shiba-inu.